Insights from insurers

Malcolm Latarche
Malcolm Latarche

23 March 2016


When it comes to understanding the problems affecting shipping, the insurance sector would appear to be in a better position than most given that insurers are in the frontline when it comes to covering losses. Yesterday, one of those insurers – Allianz Global – published its Safety and Shipping review 2016. The report has wider coverage than just the insurer’s own clients and it is extensive in scope covering virtually every facet of the modern shipping industry. Generally the report shows improving trends in most areas with total losses in 2015 numbering 85 which is well below the decadal average of 123. Notably more than a quarter of all losses were in the area of South China, Indonesia and the Philippines just as they have been for the past decade and probably longer. As an insurer, Allianz looks at shipping beyond the SOLAS fleet and counts 16 fishing vessels in the total but does not distinguish between international and domestic ships overall. The total number of incidents 2,687 in 2015 was also down and 4% lower than in 2014. Taken overall this is a promising snapshot of safety in shipping but predictably Allianz sees problems and pitfalls ahead. It believes that the economic pressures will erode safety and lead to cutting corners in maintenance. Crew shortages are another area that it sees as posing problems although some aspects of its expressed opinions do seem contradictory. Allianz predicts a shortage of 15,000 officers over the next three years and also says that officers are coming ashore earlier than used to be the case. Those that do come ashore and take up positions in shipping companies have less experience in technical matters which again poses problems. Crew shortages in times of over-capacity are to be expected but as shipping retrenches, there will be more officers and ratings looking for work and whether that is at sea or ashore the shortage should be less acute than Allianz fears. As regards lack of sea time and experience, that is in the control of the shipping companies themselves and perhaps more owners should think about taking a more hands on role of crewing and operation rather than contracting out all the time.